Home Fossil Energy Helmerich & Payne’s $2 billion KCA Deutag acquisition secures rig fleet boost and top spot in largest oil & gas regions
July 25, 2024,
by
Melisa Čavčić
In pursuit of further growth and diversification, U.S.-headquartered rig technologies and drilling solutions player Helmerich & Payne (H&P) has embarked on a business combination with KCA Deutag, the UK-based drilling, engineering, and technology services company. The acquisition, worth nearly $2 billion, is anticipated to elevate the global onshore drilling position, bring a rise in rig count, and enhance the combined company’s standing in America and the Middle East, which are perceived to be the two most prominent oil and gas-producing regions in the world.
Helmerich & Payne
The U.S. and the UK duo’s definitive agreement will see H&P shell out $1.9725 billion in cash to bring KCA Deutag into its fold, resulting in a broadened geographic and operational mix across the American and international crude oil and natural gas markets and diversified geographical exposure. This market consolidation move will enlarge Helmerich & Payne’s Middle East rig portfolio from 12 to 88 rigs, 71 of which are in Saudi Arabia, Oman, and Kuwait, turning the combined business into one of the larger rig providers in the region.
John Lindsay, President and CEO of H&P, commented: “This is a historic and transformative transaction for the company, and we are excited about what this means for H&P’s future, as it accelerates our international expansion particularly in the Middle East and enhances the company’s global leadership in onshore drilling solutions.
“KCA Deutag’s assets and operations will add resilient revenues, providing greater earnings visibility and cash flow generation. As a result, we expect to generate sizeable incremental cash flows and are confident this transaction will deliver near- and long-term growth and value creation for H&P shareholders.”
KCA Deutag’s asset-light offshore management contract business, alongside Kenera’s manufacturing and engineering operations, will enhance H&P’s capability in Europe and the Middle East. As a result, the acquisition will add an offshore management contract business, primarily made of 29 offshore platform rigs under management, and a manufacturing and engineering business with three facilities serving the energy industry.
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Posted: 8 months ago
Therefore, the U.S. player anticipates a boost in its international land operations from 1% on a standalone basis to around 19% on a pro forma basis, based on the 2023 operating EBITDA. On the other hand, offshore operations are forecast to go up from about 3% on a standalone basis to approximately 7% on a pro forma basis.
Joseph Elkhoury, CEO of KCA Deutag, remarked: “We look forward to joining H&P, combining the strengths of our people together with our geographical footprint, to create an organization with an unrivalled global network, service capability and technology offering. The size, scale and financial strength of the combined organization will provide a stable foundation for long-term growth and diversification to safeguard a sustainable and prosperous future for our people.”
The combined company is positioned to have resilient revenues and cash flow and increased earnings visibility,